Readability app rejection adds to subscription debate

Lex Friedman |
Feb. 23, 2011

Apple's recently announced subscription model and the attendant terms for in-app purchases have been the subject of much debate in the last few weeks. To the list of critics, add Arc90, whose new Readability iOS app has been rejected from the App Store. In response, the company has published an open letter to Apple, voicing its disagreement with the rules.

Arc90's core complaint seems to be that Apple is requiring Readability follow the same rules that have been put into place for all apps offering subscriptions. In this particular case, it means that the funds Arc90 gets to divvy up between itself and its participating content providers will be reduced by 30 percent for subscriptions purchased from within the app. But complaining about Apple's 30 percent rings hollow, since Arc90 itself takes that same percentage before paying its publishers.

Arc90, for its part, hasn't spelled out why such a model can't survive Apple's 30 percent cut for subscriptions purchased within the app. Presumably, the company is worried it can't turn a profit after Apple takes its share of the revenue. But in theory, Readability's business model is focused on helping content providers generate new revenue from readers who otherwise aren't actively paying for that content. It seems likely that most of the potential users of a Readability app are those who have already subscribed to the service, so any additional users who sign up via the app are icing on the cake--new customers who otherwise wouldn't be paying at all.

In concluding its open letter, Arc90 implies that this isn't a matter of business, but of principle:

P.S. We'd be glad to deliver Readability for iOS -- with in-app purchasing -- if you'd carve out 70% from your 30% fee and share it with writers and publishers, just as we do.

So, Arc90 wants Apple's fees to be adjustable, instead of its own. But, as Arc90 acknowledges, it's clearly Apple who holds all the cards in this debate. It's Apple's store, and if Readability is going to appear there, Arc90 will be forced to play by Apple's rules.